Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Cisarua Mountain Dairy / Equity Capital Markets

<ul>
<li>Aequitas Research puts out a weekly update on the deals that have been covered by the team recently along with updates for upcoming IPOs. </li>
<li>Hong Kong IPO pipeline looks strong with Weilong Delicious Global, CANbridge Pharmaceuticals,  Asymchem Laboratories, and China Tourism Group either close to approval or seeking approval with HKEX soon.</li>
<li>Indonesia ECM is looking busier than ever this year with the launch of Cisarua Mountain Dairy (Cimory) and PT Avia Avian IPO bookbuilds this week.</li>
</ul>


Aequitas Research puts out a weekly update on the deals that have been covered by the team recently along with updates for upcoming IPOs. 
Hong Kong IPO pipeline looks strong with Weilong Delicious Global, CANbridge Pharmaceuticals,  Asymchem Laboratories, and China Tourism Group either close to approval or seeking approval with HKEX soon.
Indonesia ECM is looking busier than ever this year with the launch of Cisarua Mountain Dairy (Cimory) and PT Avia Avian IPO bookbuilds this week.


ECM Weekly (14th November 2021) - Cimory, Infervision, Daiwa House REIT, Weilong Delicious

Forensic Analyst

Jason Yap, CFA

Forensic Accounting

Haidilao International Holding / Forensic Accounting

On 5 November 2021, <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> announced its decision to shut down or suspend the operation of 300 poor performing stores within the next 2 months, which is approximately one-fifth of total restaurants.Haidilao opened 308 stores in 2019 and 544 in 2020, and added 299 new stores in H1 2021.  As at 30 June 2021, Haidilao had approximately 1,600 stores.  After closing 300 stores, Haidilao remains China's largest hot pot chain with around 1,300 stores. Amidst concerns of over-expansion, Haidilao's share price has declined by 75% since its February 2021 peak, wiping out HKD333.5 billion (USD42.9 billion) of its market cap. On hindsight, Zhang Yong, founder of Haidilao, conceded that the expansion plan had been "<a href="https://www.globaltimes.cn/page/202111/1238261.shtml" target="_blank" rel="noopener">too confident</a>". In this Insight, we discuss whether Haidilao's store closures were fait accompli given the early warning signs of deteriorating performance, which becomes apparent as we examine Haidilao's performance on a store by store basis. Apart from pandemic disruptions, this deterioration would have been compounded by increased competition and permanent changes in consumption habits that have resulted from the pandemic (such as preference for products designed for convenient home cooking).

On 5 November 2021, Haidilao (6862 HK) announced its decision to shut down or suspend the operation of 300 poor performing stores within the next 2 months, which is approximately one-fifth of total restaurants.Haidilao opened 308 stores in 2019 and 544 in 2020, and added 299 new stores in H1 2021.  As at 30 June 2021, Haidilao had approximately 1,600 stores.  After closing 300 stores, Haidilao remains China's largest hot pot chain with around 1,300 stores. Amidst concerns of over-expansion, Haidilao's share price has declined by 75% since its February 2021 peak, wiping out HKD333.5 billion (USD42.9 billion) of its market cap. On hindsight, Zhang Yong, founder of Haidilao, conceded that the expansion plan had been "too confident". In this Insight, we discuss whether Haidilao's store closures were fait accompli given the early warning signs of deteriorating performance, which becomes apparent as we examine Haidilao's performance on a store by store basis. Apart from pandemic disruptions, this deterioration would have been compounded by increased competition and permanent changes in consumption habits that have resulted from the pandemic (such as preference for products designed for convenient home cooking). 

Haidilao (6862 HK)'s Store Closures - A Fait Accompli?

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/yihai-int-l-holding-ltd" target="_blank" data-smartkarma-citation="entities:22803:1" rel="noopener">Yihai Int’L Holding (1579 HK)</a> was trading at par with <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> although the former has previously been the market’s darling due to its less capital intensive and higher-margin business. But the fall during COVID was worse for Yihai compared to Haidialo as investors rushed to cash out their unrealized profit, ignoring the fact that Yihai’s previously smaller business in providing ready-to-eat food products which is essentially what the market wanted at that time, has grown bigger, and has become the differentiator during the difficult period hence maintaining respectable earnings multiples compared to Haidilao whose earnings multiple has gone through to the roof. Only recently, post the vaccine discovery, Haidilao’s earnings multiple normalized but it is still trading at almost twice as much of Yihai (92 to 50).
On a YTD basis, however, both share prices have been heavily correlated although 1) Haidilao’s revenue growth slowed considerably, 2) Yihai’s diversification away from being Haidilao’s supplier have shown result and 3) the earnings multiples differences are still persistent although it has narrowed. This begs to question that shouldn’t Yihai’s share price trading higher than Haidilao?
Yihai's share price is currently highly correlated to Haidilao although its business has become less and less correlated to the former and has pivoted away from providing condiments to Haidilao to manufacture ready-to-eat food products hence the business nature is more similar to <a href="https://www.smartkarma.com/entities/nissin-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:26062:1" rel="noopener">Nissin Foods (1475 HK)</a> although Yihai's share price is still massively underperforming Nissin Food Holdings'.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/237/131/original/image_48603681281635075064982.png?1635075064" class="editor-image img-responsive" data-smartkarma-image-id="237131"></figure>
<div class="content-remarks">
source: Reuters
</div>

Yihai Int’L Holding (1579 HK) was trading at par with Haidilao (6862 HK) although the former has previously been the market’s darling due to its less capital intensive and higher-margin business. But the fall during COVID was worse for Yihai compared to Haidialo as investors rushed to cash out their unrealized profit, ignoring the fact that Yihai’s previously smaller business in providing ready-to-eat food products which is essentially what the market wanted at that time, has grown bigger, and has become the differentiator during the difficult period hence maintaining respectable earnings multiples compared to Haidilao whose earnings multiple has gone through to the roof. Only recently, post the vaccine discovery, Haidilao’s earnings multiple normalized but it is still trading at almost twice as much of Yihai (92 to 50).
On a YTD basis, however, both share prices have been heavily correlated although 1) Haidilao’s revenue growth slowed considerably, 2) Yihai’s diversification away from being Haidilao’s supplier have shown result and 3) the earnings multiples differences are still persistent although it has narrowed. This begs to question that shouldn’t Yihai’s share price trading higher than Haidilao?
Yihai's share price is currently highly correlated to Haidilao although its business has become less and less correlated to the former and has pivoted away from providing condiments to Haidilao to manufacture ready-to-eat food products hence the business nature is more similar to Nissin Foods (1475 HK) although Yihai's share price is still massively underperforming Nissin Food Holdings'.


source: Reuters


Yihai International (1579): Diversified Away from Haidilao

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Tam Jai International / Equity Capital Markets

<ul>
<li>Although the recent media reports suggested overwhelming interest from both retail and institutional investors, the <a href="https://www.smartkarma.com/entities/tam-jai-international-co-ltd" target="_blank" data-smartkarma-citation="entities:34227:1" rel="noopener">Tam Jai International (2271 HK)</a> IPO subscription status was not all that great with subscription rates of 29.6x and 3.9x for the Hong Kong offer and international offer respectively.</li>
<li>Consequently, the IPO was priced at the low end of the offer range at HK$ 3.33 per share, which implies a market cap and EV of HK$ 4.5bn and HK$ 3.1bn respectively.</li>
<li>Nevertheless, we remain unruffled by the surprisingly low IPO subscriptions as 66% of the Hong Kong IPO during the last three months made listing gains with less than 5.0x subscriptions (international offer).</li>
</ul>


Although the recent media reports suggested overwhelming interest from both retail and institutional investors, the Tam Jai International (2271 HK) IPO subscription status was not all that great with subscription rates of 29.6x and 3.9x for the Hong Kong offer and international offer respectively.
Consequently, the IPO was priced at the low end of the offer range at HK$ 3.33 per share, which implies a market cap and EV of HK$ 4.5bn and HK$ 3.1bn respectively.
Nevertheless, we remain unruffled by the surprisingly low IPO subscriptions as 66% of the Hong Kong IPO during the last three months made listing gains with less than 5.0x subscriptions (international offer).


APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

<a href="https://www.smartkarma.com/entities/tam-jai-international-co-ltd" target="_blank" data-smartkarma-citation="entities:34227:1" rel="noopener">Tam Jai International (2271 HK)</a> raised around US$134m by pricing its IPO at HKD3.33 per share, at the bottom end of the IPO price range.Tam Jai International is a restaurant chain operator of the TamJai and SamGor branded fast casual restaurant chain in Hong Kong with operations also in Mainland China and Singapore. As of the latest practicable date (13th September 2021), the firm operated a total of 156 restaurants.Since our last note, China-based peers, with the exception of Jiumaojiu, have traded down 11-18%, whilst its HK-based peers have traded relatively flat. We maintain our original thesis that the IPO price presents a favourable risk to reward ratio and despite valuation seemingly expensive when compared to its acquisition price in 2018, we expect a normalisation of operations in FY22-23.Our previous coverage of the IPO:<ul><li>
<a href="https://www.smartkarma.com/insights/tam-jai-international-ipo-favourable-risk-to-reward-at-low-end" target="_blank" data-smartkarma-citation="insights:58091" rel="noopener">Tam Jai International IPO - Favourable Risk to Reward at Low End</a> </li></ul>

Tam Jai International (2271 HK) raised around US$134m by pricing its IPO at HKD3.33 per share, at the bottom end of the IPO price range.Tam Jai International is a restaurant chain operator of the TamJai and SamGor branded fast casual restaurant chain in Hong Kong with operations also in Mainland China and Singapore. As of the latest practicable date (13th September 2021), the firm operated a total of 156 restaurants.Since our last note, China-based peers, with the exception of Jiumaojiu, have traded down 11-18%, whilst its HK-based peers have traded relatively flat. We maintain our original thesis that the IPO price presents a favourable risk to reward ratio and despite valuation seemingly expensive when compared to its acquisition price in 2018, we expect a normalisation of operations in FY22-23.Our previous coverage of the IPO:
Tam Jai International IPO - Favourable Risk to Reward at Low End 

Tam Jai International IPO Trading - Peers Have Traded Down, but Upside from the Bottom End Remains

China

Haidilao International Holding Ltd. operates Chinese cuisine restaurant brand focusing on hot pot cuisine. The Company provides hot pots, soup bases, dipping sauces, drinks, prepared food, and other products. Haidilao International Holding opens restaurants in Taiwan, Hong Kong, Singapore, South Korea, Japan, and the United States.

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Haidilao International Holding (6862 HK)

ECM Weekly (14th November 2021) - Cimory, Infervision, Daiwa House REIT, Weilong Delicious

Aequitas Research puts out a weekly update on the deals that have been covered by the team recently along with updates for upcoming IPOs.

Sumeet Singh

Haidilao (6862 HK)'s Store Closures - A Fait Accompli?

We discuss whether Haidilao's store closures were inevitable given the early warning signs of deteriorating performance, which becomes apparent...

Jason Yap, CFA

Yihai International (1579): Diversified Away from Haidilao

Mispriced Yihai Intl - share price highly correlated with Haidilao although it has diversified away by growing its ready-to-eat food business that...

Henry Soediarko

Tam Jai International IPO Valuation

Tam Jai IPO seems to be priced at a steep discount to peers, suggesting limited downside risk to Tam Jai’s IPO price. Therefore, we remain...

Oshadhi Kumarasiri

Tam Jai International IPO Trading - Peers Have Traded Down, but Upside from the Bottom End Remains

Tam Jai International (2271 HK) raised around US$134m by pricing its IPO at HKD3.33 per share, at the bottom end of the IPO price range.

Clarence Chu

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